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What litigation tells us about the dangers of IP theft

Dave Burtt and Donald Closser | Aug. 20, 2013
While many companies are now stepping up security measures to better identify and protect their IP, still too many companies and employees fail to grasp the seriousness of protecting IP.

Former British Prime Minister Neville Chamberlain famously said "In war, there are no winners. Only losers." The same can be said of intellectual property (IP) lawsuits involving departing employees, since outside of lawyers and third-party forensic companies who thrive on a robust caseload these disputes waste too much energy and money accomplishing what reasonably diligent measures could have prevented in the first place. 

While many companies are now stepping up security measures to better identify and protect their IP, still too many companies and employees fail to grasp the seriousness of protecting IP (and the repercussions that often flow from failing to do so).

According to a recent study commissioned by Symantec, half of all departing employees retain confidential company files following their termination. Having access to confidential files obviously increases the odds that, when that employee finds a new job, they will access, disclose, or use such information.

Here are some recent trends in litigation involving mobile employees and some suggestions for both employers and employees to help minimize the cost and distraction that stem from IP theft by the departing employee.

Times have changed, but common practices have not
Before the adoption of PCs and e-mail, IP was easier to track and contain. Early trade secret lawsuits often involved the theft of hand-written customer lists, secret recipes, or old-school engineering notebooks. Nowadays, of course, most companies store digital versions of their sensitive business information, yet few companies have adopted internal security measures that effectively monitor and control their employee's access to such information, and even fewer implement restrictions on an employee's ability to copy or otherwise move confidential information offline. 

Nowadays, employees regularly create confidential business information on their home computers or other personal devices, and store such information in every manner imaginable (personal email accounts, smartphones, tablets, online storage/cloud accounts, USB flash drives or external hard drives, memory cards, DVDs, etc.). According to the Symantec survey, more than half of employees feel it's acceptable to move corporate data to personal devices, email accounts and cloud services without prior company approval. While having constant and seamless access to confidential work files no doubt increases productivity, the increased commingling of company and personal information on these devices only further increases the odds that a departing employee will fail to return all company information upon separation. 

With the seemingly never-ending invention of new methods to store/transfer files, and more and more employees working from home, companies are losing track of their valuable trade secrets. The departing employee often equipped with a 3TB external HD or even sneakier 64GB flash drive poses a significant risk for those companies who have lost control of their own IP. And companies who conduct a high-level exit interview during which they collect laptops and keycards before reiterating that departing employees are required to return company property and are prohibited from using/disclosing confidential information IP are essentially sanctioning the theft of their most valuable company assets.


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